The changes I've witnessed at EMC over the years, first as a competitor, then as an employee, and now as an analyst, have been profound. I put 11 years of my heart and soul into the company, joining when there were less than 4,000 employees and leaving when there were tens of thousands. And even though I'd been gone for about 8 years when Dell acquired EMC, and even though the joining of these two behemoths makes tremendous sense from a business standpoint, it was still somewhat bittersweet to see it happen. But it had to happen. The competitive environment demanded it. Convergence is the way of the future. Dell's server business and EMC's storage business pair beautifully--add VMware in the mix and and you have all the infrastructure pieces to put together a next-gen, software-defined data center. There may be some weak spots, but the overall portfolio is tough to beat.
The converged/hyperconverged space is, perhaps, the business unit that is the biggest beneficiary of the pairing. With these two companies coming together, they have all the bits and pieces in place to offer end-to-end converged and hyperconverged infrastructure solutions to support next-generation software-defined data centers.
We've seen some changes as a result of the integration - the division formerly known as VCE and in charge of converged/hyperconverged solutions is now CPSD (converged platforms and solutions division) and has a much broader portfolio. Maybe too broad. Lets take a quick trip down memory lane.
The VCE division was originally formed to pre-test, package, and sell integrated solutions (Vblocks) that included server (Cisco), storage (EMC), and networking (Cisco again) hardware bundled with virtualization (VMware). It was a brilliant move, significantly streamlining the procurement cycle for customers and simplifying maintenance - buy one thing instead of three, and don't worry about them working together, because it was guaranteed to work. VCE tested patches at the component level and released patch kits once they knew everything worked well together. That in itself provides huge value. Then there were hyperconverged solutions - though it was a bit slow out of the gate and had a few missteps, at the time of the acquisition, it had VxRack (for large scale environments) and VxRail (modular appliance).
Enough history - what about today? Now, combined with Dell, the portfolio isn't quite as clean. It has both Cisco server-based products and Dell server-based products across both the converged (VBlock) and hyperconverged portfolio (Rack and Rail), and it offers the repackaged Nutanix hyperconverged product, the XC. Given that Dell made its name on streamlined offerings, supply chain excellence and simplified offerings, this porttfolio looks pretty broad and messy.
But it's not like EMC can just turn around and simplify the portfolio by only selling its own products--that's a simple solution to a complex problem. There is significant demand for the Cisco and Nutanix-based products. Shipments of the Nutanix-based XC grew at a triple digit rate year over year, and Cisco-based VBlocks are going strong. Shutting these off would force customers to start evaluating alternative solutions - and could quickly push them to look beyond Dell EMC for answers, especially as companies like HPE, Cisco, NetApp, Pivot3 and Lenovo continue to strengthen their offerings.
The end result of the broad portfolio is that Dell EMC Technologies has a challenge in bringing it to market - how do you train the salesforce and channel partners to really solution sell? And of course, when do they sell converged versus servers, storage, and networking seperately, vesus hyperconverged? How do you take a top down look at what a specific customer's challenges and goals are, and map that back to the right Dell/Cisco/Dell EMC/Nutanix-based solution? And, of course, will the salesforce start the slow shift to Dell EMC-based products or will they give proper time and consideration to OEM products?
It's difficult. Dell EMC needs to walk a fine line. It needs to balance the traditional business, which pays the bills - like big iron storage, which is expensive and has high margins, with next-gen solutions, like hyperconverged, which tend to cost less, have a lower entry point, lower margins but high/more frequent repeat buy rates. Most IT shops have a home for multiple types of architectures - hyperconverged solutions (today) are well suited to a large portion of applications on the market, but traditional big-iron approaches are typically well suited to the most demanding applications (bandwidth/throughput/IOPS that require dedicated resources). And of course converged systems walk the middle line. But which converged or hyperconverged product do you sell when?
So it's up to Dell EMC to ensure the salesforce is educated in the portfolio and shifts from moving boxes to having a higher level, consultative discussion with IT about transformation. It is something they've been doing well at the corporate level but that needs to permeate the salesforce.
So - at Dell EMC World I'll look forward to hearing more about how Dell EMC is positioning their products to meet customer transformation requirements, and to talking to customers and prospects about their shifting IT priorities, infrastructure and cloud plans, as well as hearing more from Dell EMC executives about training the salesforce to elevate the discussion. I expect it will be a very educational week!